Former Equities Dealer Imprisoned on Front-running and Tipping Charges

Mr John Joseph Hartman, 25, of Mosman, New South Wales, has been sentenced by the Supreme Court of New South Wales to a term of four years and six months imprisonment on 25 insider trading related charges brought by the Australian Securities and Investments Commission (ASIC).

In April, Mr Hartman pleaded guilty to all charges which were committed while he was employed by Orion Asset Management Limited (Orion) as its equities dealer.

Justice McClellan sentenced Mr Hartman to serve a minimum term of three years imprisonment before being eligible for parole on 1 December 2013.

Mr Hartman was convicted of 19 counts of insider trading for trading in contracts for difference (CFD) products while in possession of information about Orion’s trading intentions. Mr Hartman admitted to establishing positions in particular stocks through his CFD account at IG Markets prior to Orion trading in the same stocks on the open market. Mr Hartman was then able to exit his CFD positions and profit from the effect of Orion’s trading on the underlying stock price. This conduct is often described as ‘front-running’. The trades were made by Mr Hartman between July 2008 and January 2009 and resulted in a total gross profit of approximately $1.59 million.

Mr Hartman was also convicted of 6 counts of communicating inside information about Orion’s trading intentions to an alleged associate between March 2006 and June 2008.

Mr Hartman’s sentence included discounts for his guilty plea and his cooperation, which included a promise of future assistance.

In December 2009, Mr Hartman consented to the forfeiture of approximately $1.57 million to the Commonwealth under the Proceeds of Crime Act 2002. This amount was formerly the credit of Mr Hartman’s account with IG Markets which they were holding as stakeholder.

ASIC acknowledges Orion’s full cooperation and assistance in this matter.

The Commonwealth Director of Public Prosecutions prosecuted the matter.